Battered oil markets perked up on faint hopes that OPEC may convince rival Russia to orchestrate a production cut and rein in a supply glut.

Oil traders shunned news of weak economic data from China and a World Bank oil price forecast downgrade, taking oil past US$31 per barrel after OPEC secretary-general Abdullah al-Badri said “it is crucial that all major producers sit down and come up with a solution.”

Markets were also buoyed by Iraq oil minister Adel Abdel Mahdi suggesting that he “saw more flexibility” on a deal from Saudi Arabia and Russia. U.S. crude shot up 3.7 per cent, at US$31.45 per barrel.

But some long-time OPEC watchers shrugged off the latest pronouncements as nothing but cheap talk.

“I don’t think any of them would actually be willing to cut if it came down to it,” Thomas Pugh, commodities economist at London-based Capital Economic said in an interview. “The problem is they all want somebody else to cut.”

Julian Lee, an analyst at Bloomberg, said in a note to clients: “Don’t get too excited about talk of oil output cuts.”

Since November 2014, OPEC, led by Saudi Arabia, has increased output to drive prices down and squeeze out higher cost non-OPEC producers. Wood Mackenzie estimates projects worth US$380 billion mostly in non-OPEC countries have been axed as oil prices have shed 72 per cent since their peak in July 2014.

Even OPEC members are not spared with the group’s collective revenues from oil receipts declining by nearly half to US$380 billion last year compared to 2014, according to the U.S. Department of Energy estimates.

A deal is unlikely, as Saudi Arabia — the only OPEC country that matters in a cut — and Russia don’t see eye to eye on most issues. Riyadh and Moscow actively compete with each other in Asian and European markets, and the two are also on opposite sides of the political stalemate in Syria.

Saudi Arabia has maintained it would cut production only if others agree to a cut, while Russian officials have repeatedly suggested that an artificial cut would be ineffective.

But Helima Croft, global head of commodity strategy at RBC Capital Markets LLC, said Russia may be changing its tune.

“The path to a cut goes through Moscow,” Croft said, noting that there have been low-level economic protests in Russia that could make President Vladimir Putin nervous.

“Russia is vitally important to watch. If Putin decides that the economic cost of not co-operating are too high, then it will be a potential catalyst for a real reversal in OPEC’s decision.

“I don’t see Saudi reversing course unless they can say they maintained the principle that OPEC did not cut alone.”

Putin also reportedly asked Syrian president Bashar Al Assad to step down, which Croft said could be the beginning of a rapprochement with Saudi Arabia, who opposes the Syrian leader.

Russia may be softening, but the Saudis have not yet indicated a shift in strategy.

“Demand will grow, as it has already started in 2015, and there will be a period not far into the future (when) demand will catch up with supply,” Khalid al-Falih, chairman of state oil firm Aramco told reporters on Tuesday.

The stalemate likely means oil prices will remain volatile in the interim.

“They might dip into the high US$20s and than the late US$30s for a little bit, depending on what the story of the day is,” Pugh said.

Global oil producers remain in the grip of the most severe downturn in a generation. Almost three-fourths of the 900 respondents surveyed by Norwegian consultancy DNV-GL said they were preparing their company for a sustained period of low oil prices, and more than four in ten believed that oil prices would not increase in 2016.

“It is expected that capital spending will decrease across the sector as a whole: 51 per cent said that their company’s capital investment will decline in 2016,” the DNV-GL said in a report Monday.

Meanwhile, the World Bank piled on to the gloom Tuesday, lowering crude oil forecast for 2016 to USD37 per barrel, from USD51 per barrel in its October forecast.

If Friday's gains are anything to go by, investors are champing at the bit

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